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As the cost for health care rises, payors are facing increasing scrutiny and regulatory oversight over certain practices believed to be contributing to these rising costs: “junk plans” and prior authorizations. This year, the Biden Administration announced new rules cracking down on junk plans, closing regulatory loopholes and boosting consumer protections. The Administration also proposed rules that would shorten the payors’ response period for prior authorizations and require payors to provide better explanations for denials. This year, many states also considered legislation on prior authorization. This increased pressure has led to some commercial payors taking steps to reduce and streamline prior authorizations.   Junk Health Insurance Plans: In July of this year, the Biden Administration drew much attention to health plans exploiting legislative loopholes in the Affordable Care Act (ACA). In a press release, the Administration claims that the rise in “junk plans” is the result of Trump-era policies. In 2018, the Trump Administration expanded the duration of Short Term, Limited Duration Insurance (STLDI) plans from 90 days to a maximum of three years. These junk plans often include limitations on benefits and are exempt from the ACA’s main consumer protections requirements, such as coverage for pre-existing conditions. Through questionable marketing practices, these plans were often allowed to mimic comprehensive-care plans, leaving patients financially vulnerable. In order to crack down on these junk plans, the Biden Administration proposes to:

• Put the “S” back in “STLDI” plans. If finalized, STLDI – short-term – plans would return to the three-month limit, or four months of coverage, if extended.
• Put fixed-indemnity plans back in their place. These plans were intended to be a form of income replacement when consumers get sick. The proposed rules would prohibit payors from designing their plans to mimic comprehensive health insurance.
• Make plans clearly disclose their limits. The proposed rules would require plans to provide consumers with disclaimers outlining what is and what is not covered by their health plan, including to those already enrolled in their health plans.

  Prior Authorizations: Prior Authorization (PA) practices require that patients obtain approval before they can proceed with certain plans of care. This month, a report by Kaiser Family Foundation details how patients and physicians are resorting to publicly shaming insurance companies on social media in order to reverse PA denials. The article suggests that payors may be using PAs as a loophole to get around the ACA’s prohibition on plans from denying or cancelling coverage to patients because of their preexisting conditions.

• CMS has proposed rules which would require certain payors to respond to PA requests within seven days or 72 hours for urgent requests, and to provide detailed explanations when requests are denied. In June, a bipartisan group of nearly 300 members of Congress wrote a letter to CMS urging them to finalize the proposed rule. This rule would not apply to employer-sponsored health plans – meaning about half of Americans would not benefit. This rule, if implemented, would go into effect in 2026.
• At least 30 state legislatures have introduced nearly 90 bills relating to PA reform this year. The majority aim to shorten the time for payors to respond to requests, require payors to publicly release PA data by drug and service, and extend the validity for approvals up to a year. “Gold card” programs have also grown in popularity, with many legislators wanting to exempt physicians from PA requirements if they have had at least 90% approvals within the last year.
• Perhaps it is because some payors are seeing the proverbial “writing on the wall,” as some commercial payors are voluntarily eliminating PAs for certain drugs and services or taking action to speed up responses to requests.
  • Cigna announced it is eliminating PA requirements for over 600 procedures which account for roughly 25% of the requests it receives.
  • UnitedHealth Group announced that it would cut the list of services subject to PAs by 20% and roll out a “gold card” program for enrollees to bypass most PA requirements.
  • Humana announced it is partnering with EHR companies to streamline the PA process.